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The Pandemic’s Effect on Mortgage Processing

Business disruptions and delays during the pandemic stem from social distancing measures, staff illness, and people working from home. Adding to the difficulties has been a downturn in the speed of mail delivery because of postal employee illness and mail transportation delays due to cancelled commercial airline flights that normally transport mail.


Unprecedented Challenges

When combined with increased mortgage activity triggered by the Coronavirus Aid, Relief, and Economic Security (CARES) act and refinancing movement sparked by low interest rates, the workload and unusual conditions have made it more important than ever for mortgage servicers and lenders to track and account for loan documents received through the mail. Manual methods of recording when documents arrive at lender facilities and how they are delivered to departmental recipients won’t work in this environment. Employees working on customer mortgage transactions from home need to have immediate access to documents received via the mail. Mortgage industry companies are turning to systems that can turn postal mail into electronic documents they can distribute to their teleworkers.

COVID-19 presents unusual challenges for mortgage lenders and servicers. They must respond to rapidly evolving regulatory requirements and could face future oversight actions. Implementing measures now, such as investing in an inbound mail processing system, could provide these institutions with vital information, should they need to document their actions.

Much of the communication connected with loan restructuring, forbearance, and refinancing will take place via the US mail—an institution that has experienced its own COVID-related problems. Companies don’t want to compound mail delivery issues with slow or inaccurate processing once the documents arrive at their facilities.


Risk Mitigation

If history is any indication, companies with inadequate handling and processing procedures risk exposure to future class action lawsuits. This happened a decade ago during another economic crisis when large amounts of borrowers attempted to restructure loans via the government’s Home Affordable Modification Program (HAMP). To protect themselves from future legal issues, mortgage servicing companies will be wise to ensure they can account for all transaction details, such as verifying when and where payments and other documents were received.

The Federal Financial Institutions Examination Council (FFIEC) recommends mortgage industry companies adopt some pandemic-specific strategies. Recommendations include taking steps to prevent operational disruption in the event of widespread employee infection. Automated systems that transfer mail handling and tracking duties from staff members to equipment and software would fall into this category.


Digital Mail

Digital inbound mail systems, such as Tritek’s Digital Email Delivery Solution feature document feeders, scanners, and sorting components. Paired with Tritek’s powerful rules engine, this system logs the receipt of mail, records images, tags mailpieces with unique ID numbers, sorts for delivery, or allows employees to receive the mail electronically. Such a solution is ideally suited to address the revolutionary changes that COVID-19 forced on the mortgage industry.

Installing a digital inbound mail system helps companies control physical documents when volumes are rising and staffing levels are uncertain. Lost documents, late payments, or other issues associated with the handling of paper documents will be reduced, along with the organization’s exposure to legal or regulatory compliance enforcement.

Simultaneously, a system that enables mail centers to distribute hard copies, with options to open and scan documents to make them accessible to de-centralized workers, will yield benefits even after the pandemic subsides. Many experts believe the work-from-home model made necessary by COVID-19 will become a prevalent work scenario even when health conditions improve. Mortgage lenders and servicers should take this opportunity to invest in technology that will be necessary to remain competitive when business conditions stabilize.

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